The amount of analysts predicting recessions could make up an entire industry, but though they have been wrong much of the time in the last two years, many people still lend them credence, contends an article in Yahoo! Finance. Contrary to those naysayers, the economy is not already in a recession, though there are certainly things to be concerned about, such as high interest rates, persistent inflation, reduced corporate earnings and increased debt. Still, forecasters are often wrong, and their track record over the last two years should certainly give investors pause.
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On July 19, 2021, the National Bureau of Economic Research announces that the recession that started in February 2020 has ended—in April 2020, a full 16 months before their announcement. A month later, an article in Barron’s warns that a “flash recession” could be on the horizon. That recession never materializes. In October 2021 Bloomberg questions whether the U.S. economy is already in a recession—the answer to that question is no, as the GDP growth for the quarter clocks in at 6.9%. But that doesn’t stop the New York Post from printing the words “U.S. has dipped into recession,” which was patently untrue, Yahoo! Finance maintains.
At the start of 2022, the conservative-leaning Heritage Foundation declared that we were at the start of a “major recession,” but though the GDP growth dipped that quarter to -1.6%, much of that was attributed to the Covid Delta surge. It’s also well known that the party out of power in Washington—in this case, the Republicans—generally like to spout doom-and-gloom in order to sway voters to their side. In March of last year both Forbes and Fortune posited that the Ukraine war would push the U.S. and Europe into a recession, and while that was a real possibility, that recession never materialized, either. Throughout last summer there was much speculation that a recession was coming, with Politico saying it was “inevitable.” GDP growth declines for the second quarter in a row, coming in at -0.6%. But while there was much conviction that a recession was imminent, it never happened, and the National Bureau of Economic Research has not indicated that there was a recession at any time during 2022.
Speculation that a recession was brewing in the near future continued throughout last fall, according to the article. In September, the Conference Board proclaimed that “U.S. recession probability reaches 96%.” But in the fourth quarter, consumer spending fueled GDP growth up 2.9%. And finally, on February 27, 2023, the AP stated that the “2023 U.S. recession now expected to start later than predicted.” Whether we will still be waiting for it at the end of the year is anyone’s wild guess.
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